Correlation Between Onxeo SA and Mid-America Apartment

Can any of the company-specific risk be diversified away by investing in both Onxeo SA and Mid-America Apartment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Onxeo SA and Mid-America Apartment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Onxeo SA and Mid America Apartment Communities, you can compare the effects of market volatilities on Onxeo SA and Mid-America Apartment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Onxeo SA with a short position of Mid-America Apartment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Onxeo SA and Mid-America Apartment.

Diversification Opportunities for Onxeo SA and Mid-America Apartment

-0.42

Correlation Coefficient

Onxeo SA  Mid-America Apartment

Very good diversification

The 3 months correlation between Onxeo and Mid-America is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Onxeo SA and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment and Onxeo SA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Onxeo SA are associated (or correlated) with Mid-America Apartment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of Onxeo SA i.e., Onxeo SA and Mid-America Apartment go up and down completely randomly.

Pair Corralation between Onxeo SA and Mid-America Apartment

Assuming the 90 days horizon Onxeo SA is expected to generate 1.18 times less return on investment than Mid-America Apartment. In addition to that, Onxeo SA is 9.6 times more volatile than Mid America Apartment Communities. It trades about 0.01 of its total potential returns per unit of risk. Mid America Apartment Communities is currently generating about 0.11 per unit of volatility. If you would invest  15,028  in Mid America Apartment Communities on December 4, 2024 and sell it today you would earn a total of  1,197  from holding Mid America Apartment Communities or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Onxeo SA  vs.  Mid America Apartment Communit

Onxeo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Onxeo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Onxeo SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mid America Apartment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mid America Apartment Communities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mid-America Apartment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Onxeo SA and Mid-America Apartment

The main advantage of trading using opposite Onxeo SA and Mid-America Apartment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Onxeo SA position performs unexpectedly, Mid-America Apartment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mid-America Apartment will offset losses from the drop in Mid-America Apartment's long position.

The idea behind Onxeo SA and Mid America Apartment Communities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.